BEFORE THE HEARING BOARD

OF THE

ILLINOIS ATTORNEY REGISTRATION

AND

DISCIPLINARY COMMISSION

 

In the Matter of:

 

RUFUS LYNWOOD COOK,

Commission No.  2012PR00164

Attorney-Respondent,

 

No.  509302.

 

In the Matter of:

 

BARBARA REVAK,

Commission No. 2012PR00165

Attorney-Respondent,

 

No.  2320258

FILED - December 18, 2012

COMPLAINT

 

Jerome Larkin, Administrator of the Attorney Registration and Disciplinary Commission, by his attorney, Marcia Topper Wolf, pursuant to Supreme Court rule 753(b), complains of Respondents Rufus Cook ("Respondent Cook") and Barbara Revak ("Respondent Revak") and alleges that the Respondents have engaged in the following conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, and which subjects Respondents to discipline pursuant to Supreme Court Rule 770:

1. Respondent Cook has been licensed to practice law since 1959 and Respondent Revak has been licensed to practice law since 1974.  They are partners in the law firm Cook, Revak & Associates ("CRA").  In or about September 2004, Respondents agreed to represent Alzine Davis ("Davis") in claims Davis had  against CCC Development Corporation ("CCC) and against Charles Newsome ("Newsome") and Charles Price ("Price") for their alleged mismanagement of properties owned by CCC and for their alleged misappropriation of corporate funds. Davis paid CRA $2,500 to investigate her claims.

2. Davis told Respondents that Newsome, Price and Davis each held a one-third interest in CCC, which was incorporated in or about 1997, and whose primary purpose was the ownership and development of real estate.  In or about 1998, CCC acquired title to three properties located in Chicago, Illinois, at, respectively, 4501 S. King Drive, 5850-5858 S. King Drive, and 5027 S. Drexel.

3. In or about January 2005, Davis met with and spoke on the telephone with Respondent Revak regarding the above-summarized disputes Davis was having with Newsome and Davis.  Based upon Respondents' investigation of her claims, as reported to Davis by Respondents, Davis agreed to retain the services of CRA, Cook and Revak, to pursue her claims.  On February 16, 2005, Davis entered into a contingency fee agreement with CRA (the "2005 Fee Agreement"). Respondent Revak signed the 2005 Fee Agreement on behalf of CRA. 

4. The 2005 Fee Agreement provided, in part:

Client wishes to pursue a lawsuit against CCC Development Corp., and against Charles Newsome and Charles Price, individually, in order to recover monies or properties due her as a shareholder of CCC, and to recover damages from Newsome and Price for their mismanagement of CCC Development Corp., and their wrongful taking of corporate funds.(introductory paragraph)

 

If attorney determines to prosecute the matter to final judgment, attorney agrees to perform or secure the performance of all necessary legal service to judgment, or to obtain settlements satisfactory to client and attorney.  Should it be necessary to prosecute or defend an appeal, any such work will be undertaken by attorney subject only to a separate agreement between the parties.  No appellate services are covered by this agreement.

(par. 2)

Client agrees to pay attorney for services to be rendered pursuant to this Agreement a sum equal to 33 1/3% of the gross amount of any sum of money or other consideration received, recovered or obtained on client's behalf with respect to the same claim, either by final judgment or by any compromise or voluntary settlement thereof.  This sum is separate and apart from any attorney's fees which may be awarded by the court to counsel and the said 33 1/3% shall not be reduced by any court-awarded attorney's fees.

(par.3)

 

5. On or about March 11 2005, CRA filed a complaint for damages in the Circuit Court of Cook County, against CCC, Newsome and Price, as well as a Newsome/Price partnership, C&C Properties.  The case was docketed as: Davis v. Newsome, et al., 05 CH 04591.  The case went to trial in March 2007.  On October 28, 2007, the Court entered a ruling and judgment in favor of Davis for $415,829 and against Newsome and Price, jointly and severally.  Davis' request for punitive damages and attorney's fees, pursuant to a motion filed by Respondents Cook and Revak, was denied.

6. Defendants filed an appeal on January 8, 2008 and CRA filed a cross-appeal on behalf of Davis.  (No. 1-08-0084, First District). 

7. On or about May 16, 2008, CCC sold its 5850 S. King Drive property for $1,946,000.  After paying off the existing mortgage and other distributions, there remained $980,492.36 in seller proceeds.  On May 21, 2008, the Court, which had not ordered the sale,  approved the sale and entered an order directing that the sales proceeds, which were being held in escrow by the title company, be distributed as follows:

(a) $219,712.95 to CCC for expenses related to the 5850 S. King Drive property;

 

(b) 1/3 of the balance to Alzine Davis (1/3 of the balance of $760,779.41 was $253,590.60);

 

(c) $457,411.90 to the Circuit Court of Cook County from Newsome and Price's 2/3 share of the sales proceeds, to secure the 10/28/07 judgment during the pendency of the appeal (No. 1-08-0084, First District); and

(d) the remaining balance ($49,776.91), each to Newsome and Price.

8. Respondents had full knowledge of the May 21, 2008 Order on May 21, 2008 and thereafter. The Title company complied with the May 21, 2008 Order, including distributing $253,590.60 to Davis on May 23, 2008.

9. On May 23, 2008, the day Davis received her 1/3 of the sales proceeds from the sale of 5850 S. King Drive, Respondent Cook called Davis into the CRA offices and told her that CRA was entitled to an increased percentage of her recovery because of all the work the firm had done on the case, including the appeal.  Respondent Cook amended the 2005 Fee Agreement by changing the percentage of attorneys' fees from 33 1/3 % to 40 % of the gross amount of any sum of money or other consideration received or obtained on the client's behalf.   The changes were handwritten by Respondent Cook and initialed by Davis and Respondent Cook on May 23, 2008.  Davis felt pressured to sign the revised agreement.  (the "2008 Revised Fee Agreement").  

10. As a result of Respondents agreeing to represent Davis, they had a fiduciary relationship with Davis that placed a duty on them to exercise the highest degree of honesty, loyalty, and good faith toward Davis; to place Davis' interests above Respondents' own self-interests; and to provide Davis with sufficient information to permit her to make informed decisions regarding Respondents' representation.

11. Contrary to the express language of paragraph 2 of the 2005 Fee Agreement, the 2008 Revised Fee Agreement was not limited to appellate work, but rather increased CRA's share of the final judgment or any settlement thereof.

12. At no time did Respondents advise Davis to consult with independent counsel before she signed the 2008 Revised Fee Agreement, and Respondents knew that Davis had not done so, since Davis signed the revised agreement on May 23, 2008 in the CRA offices, the first time she saw the revised agreement.   At no time did Respondents explain to Davis that the terms of the 2008 Revised Fee Agreement were contrary to the express language of the 2005 Fee Agreement and that Davis had no obligation to agree to and sign the 2008 Revised Fee Agreement. 

13. While at the CRA offices on May 23, 2008, Respondent Cook further pressured Davis into paying CRA 40% of Davis' 1/3 portion of the sales proceeds from the sale of 5850 S. King Drive, which Davis alone had received per the May 21, 2008 court order. 

14. At no time did Respondents advise Davis to consult with independent counsel before she paid CRA 40% of her 1/3 portion of the sales proceeds from the sale of 5850 S. King Drive.  At no time did Respondents advise Davis that there was no basis for Davis to make such a payment pursuant to either the 2005 Fee Agreement or the Revised 2008 Fee Agreement. Both agreements provided that CRA's fees were based upon an amount received either by final judgment or by any compromise or voluntary settlement, and the only thing that CRA "recovered" on Davis' behalf, as of May 23, 2008, was the $415,000 judgment.

15. Notwithstanding the fact that there was no basis for the payment of 40% of Davis' proceeds from the sale of the 5850 South King Drive property, as recognized in the May 21, 2008 court order, on May 23, 2008, Davis wrote CRA a check for $106,563.26, which represented 40% of her $253,590.60, plus $4,127.02 in costs. 

16. After filing their respective notices of appeal and submitting the record, the parties entered into settlement negotiations.  No briefs were submitted to the appellate court by the parties.  On July 30, 2008, the parties entered into a release and settlement agreement, wherein they agreed to dismiss their respective appeals and present an agreed order to the Chancery Division judge asking that she enter an order directing the Clerk of the Circuit Court of Cook County to release the money held on behalf of the parties.  In addition, the parties agreed that the funds ($458,396.61) being held be deposited into the CRA client funds account and that, thereafter, $315,000 would be paid to Davis and CRA, and CRA would release any attorney lien upon that payment.  CRA was to then release the balance of the funds to Newsome and Price as they jointly directed in writing. 

17. On July 30, 2008, the Chancery Division judge entered a disbursement order consistent with the release and settlement agreement.  CRA deposited the funds into its client trust account and, thereafter, paid $189,396 to Davis (60.1% of $315,000); $126,264.10 to CRA (balance of $315,000); $72,000 to the Newsome and Price attorneys, and $70,736 to CCC.  Thus, CRA received total fees of $227,700.24 (plus costs and the original payment of $2500) or, more than 72% of the amount of the judgment settled upon ($315,000) to be awarded to Davis, or 55% of the original amount of the judgment awarded to Davis. 

18. Respondents did not perform services sufficient to justify fees of $227,000 for their work on behalf of Davis related to the CCC litigation, as the amount of time and labor required, or the novelty and difficulty of the work performed by Respondents, did not justify their fees, and Respondents' fees were unreasonable in light of the customary fees charged in the legal community for similar legal services. 

19. Respondents' fees were inconsistent with both the 2005 Fee Agreement and the 2008 Revised Fee Agreement and were obtained from Davis by overreaching the attorney-client relationship and by falsely advising Davis that they were entitled to 40% of the sales proceeds that Davis received from the sale of 5850 S. King Drive. 

20. By reason of the conduct described above, Respondents have engaged in the following misconduct:

 

a. breach of fiduciary duty;

b. overreaching the attorney-client relationship;

 

c exerting undue influence;

 

d. failing to explain a matter to a client to the extent necessary to permit the client to make informed decisions regarding the representation, in violation of Rule 1.4(b) of the Illinois Rules of Professional Conduct (1990);  

e. charging an unreasonable fee, in violation of Rule 1.5(a) of the Illinois Rules of Professional Conduct (1990);

 

f. conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct (1990); and

 

g. conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.

 

WHEREFORE, the Administrator respectfully requests that this matter be assigned to a panel of the Hearing Board, that a hearing be held, and that the panel make findings of fact, conclusions of fact and law, and a recommendation for such discipline as is warranted.

Respectfully submitted,

Jerome Larkin, Administrator

Attorney Registration and

Disciplinary Commission

 

 

By: Marcia Topper Wolf

 

Marcia Topper Wolf

Counsel for Administrator

One Prudential Plaza

130 East Randolph Drive, #1500

Chicago, Illinois  60601

Telephone:  (312) 565-2600